Participation Games and international environmental agreements: a nonparametric model

Larry Karp and Leo Simon

Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series from Department of Agricultural & Resource Economics, UC Berkeley

Abstract: We examine the size of stable coalitions in a participation game that has been used to model international environmental agreements, cartel formation, R&D spillovers, and monetary policy. The literature to date has relied on parametric examples; based onthese examples, a consensus has emerged that in this kind of game, the equilibrium coalition size is small, except possibly when the potential benefits of cooperation are also small. In this paper, we develop a non-parametric approach to the problem, and demonstrate that the conventional wisdom is not robust. In a general setting, we identify conditions under which the equilibrium coalition size can be large even when potential gains are large. Contrary to previously examined leading special cases, we show that reductions in marginal abatementcosts in an international environmental game can increase equilibrium membership, and we provide a measure of the smallest reduction in costs needed to support a coalition of arbitrary size.

Keywords: Life Sciences; Social and Behavioral Sciences; stable coalitions; participation games; International Environmental Agreement; climate agreement; trans-boundary pollution; investment spillovers (search for similar items in EconPapers)
Date: 2012-02-13
New Economics Papers: this item is included in nep-cdm, nep-ene, nep-env and nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Participation games and international environmental agreements: A non-parametric model (2013)
Working Paper: Participation games and international environmental agreements: a nonparametric model (2012)
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